Chapter 5: Distributing Services Through Physical And Electronic Channels

1. Services Marketing 7e, Global Edition Chapter 5: Distributing Services Through Physical And Electronic Channels

2. Overview Of Chapter 5 • Distribution in a Services Context • Options for Service Delivery • Place and Time Decisions • Delivering Services in Cyberspace • The Role of Intermediaries • The Challenge of Distribution in Large Domestic Markets • Distributing Services Internationally

3. What is Distribution ? Distribution: The way in which something is shared out among a group or spread over an area.

4. Distribution in a Services Context

5. Distribution in a Services Context • In a services context, we often don’t move physical products • Experiences, performances, and solutions are not being physically shipped and stored • More and more informational transactions are conducted through electronic and not physical channels

6. Applying the Flow Model of Distribution to Services The three interrelated elements of distribution are: • Information and promotion flow • To get customer interested in buying the service • Negotiation flow • To sell the right to use a service • Product flow • To develop a network of local sites

7. Distinguishing(unique) between Distribution of Supplementary and Core Services • Most core services require physical locations • Many supplementary services are informational; can be distributed widely and cost-effectively via other means • Telephone • Internet

8. Information and Physical Processes of Augmented(increased) Service Products

9. Core Using Websites for Service Delivery Information Read brochure/FAQ; get schedules/ directions; check prices Consultation Conduct e-mail dialog Use expert systems Payment Pay by bank card Direct debit Billing Receive bill Make auction bid Check account status Order-Taking Make/confirm reservations Submit applications Order goods, check status Exceptions Make special requests Resolve problems Hospitality Record preferences Safekeeping Track package movements Check repair status Information Process Physical Process

10. Options for Service Delivery

11. How should services be distributed? Distribution Options for Serving Customers • Customers visit service site • E.g. Theater and Barber shop when customer has to be physically present • Service providers go to customers • E.g House Panting and Mobile Car wash • More expensive and time-consuming for service provider • Service transaction is conducted remotely • E.g. Credit card company and TV Station

12. Channel Preferences Vary Among Customers • For complex(multifaceted) and high- perceived(supposed) risk services, people tend to rely(trust) on personal channels (e.g. mortgage dealing they will use face to face) • Individuals with greater confidence and knowledge about a service/channel tend(have a habit of) to use impersonal(easy to use) and self-service channels • Customers with social motives(reasons) tend to use personal channels • Convenience is a key driver of channel choice

13. Place and Time Decisions

14. Place Decisions of Service Delivery • Cost, productivity, and access to labor are key determinants to locating a service facility • Location constraints(limitations) • Operational requirement (e.g., airports) • Geographic factor (e.g.,ski resorts) • Need for economies of scale (e.g., hospitals)

15. Place Decisions of Service Delivery • Ministores • Creating many small service factories to maximize geographic coverage (like ATM Machines, small Franchises) • Locating in Multipurpose Facilities • Proximity(nearness) to where customers live or work • Service Stations

16. Time of Service Delivery • Traditionally, schedules were restricted • Service availability limited to daytime, 40-50 hours a week • Today • For flexible, responsive service operations: 24/7 service, 24 hours a day, 7 days a week, all around the world

17. Delivering Services in Cyberspace

18. Service Delivery Innovations Facilitated by Technology • Technological Innovations • Development of “smart” mobile telephones and PDAs, and presence of Wi-Fi • Voice-recognition technology • Websites • Smart cards - Store detailed information about customer - Act as electronic purse containing digital money • Electronic channels can be offered together with physical channels, or replace physical channels

19. E-Commerce: Move to Cyberspace • What are the factors that encourage you to use virtual stores? • Convenience • Ease of search • Broader selection • Potential for better prices • 24-hour service with prompt (quick) delivery

20. Role of Intermediaries(Mediators)

21. Franchising • Definition: An authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities, for example acting as an agent for a company's products. "Toyota granted the group a franchise“ “Mobily, STC & Zaintelecome granted the group a franchise.

22. Franchising • Franchisor provides training, equipment, and support marketing activities. • Franchisees invest time and finance, and follow copy and media guidelines of franchisor. • Advantages: • Expand delivery of effective service concept without a high level of monetary investment • Franchisees are motivated to ensure good customer service and high-quality service operations

23. Franchising • Disadvantages of franchising • Loss of control over delivery system and how customers experience actual service • Effective quality control is difficult • Conflict between franchisees may arise especially as they gain experience

24. Challenge of Distribution in Large Domestic Markets

25. The Challenge of Distribution in Large Domestic Markets • Distributing services (i.e.,physical logistics) faces challenges due to: • Distances involved • Multiple time zones • Multiculturalism • Differences in laws and tax rates